Thunderstruck Plc Purchased £2,000 of Inventory,paying £800 Cash

question 5

Multiple Choice

Thunderstruck plc purchased £2,000 of inventory,paying £800 cash.How would you record this transaction using double entry bookkeeping?

• A) Debit cash £800, debit accounts payables £1,200 and credit inventory £2,000
• B) Credit cash £1,200, credit accounts payables £800 and debit inventory £2,000
• C) Credit cash £800, credit accounts payables £1,200 and debit inventory £2,000
• D) Credit cash £800, debit inventory £800

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Definitions:

Liability

A financial obligation or debt owed by a business or individual to others, which requires settlement in the future.

Asset

Resources owned or controlled by a business, expected to produce future economic benefits.

Accounting Period

A specific period of time used for financial reporting, typically a quarter or year.

Trial Balance

A Trial Balance is a report that lists the balances of all general ledger accounts at a specific point in time, utilized to verify the total debits equal total credits in the accounting system.